Talented, Controllable Players Are Baseball’s Most Valuable Resource
Nelson Cruz represents one of the more dangerous cost-controlled weapons in the Texas Rangers' arsenal.This is the third article in a series dedicated to revealing what I consider to be the underlying principles to building a winning baseball organization.
[Editor's note: The first installment of David's multi-part series, entitled "You Can't Build A World Series Champion" and first published on June 20th, 2009, can be viewed here, while the second installment, entitled "Free Agents Are Not Free" and first published on September 3rd, 2009, can be viewed here.]
PRINCIPLE NO. 3 -- TALENTED, CONTROLLABLE PLAYERS ARE THE BEDROCK OF LONG-TERM CONTENDERS
On Opening Day 2009, the average player payroll for the 30 major league teams was $91.6 million and the median was $80 million. Eighteen major league teams have 2009 payrolls of $60-100 million, which presumably represents the budget range that allows most teams to turn a profit and still have a shot at contending for a playoff berth. Each team has a 25-man roster, so the average salary for players on the majority of major league teams is $2.4 million to $4 million. That annual salary in 2009 would have been sufficient to sign the likes of Chan Ho Park, Garrett Anderson, Daniel Cabrera, Felipe Lopez, Darren Oliver, Jeremy Affeldt, and Juan Rivera.
Of course, teams are not reliant on free agents to fill their rosters and they benefit significantly from the collective bargaining agreement, which provides teams with at least six years of pre-arbitration and arbitration control for players. It can be argued that team control of talented young players is the great equalizer between the handful of organizations with seemingly unlimited financial resources (Yankees, Mets, Red Sox, Cubs) and the rest of clubs that compete in the major leagues.
In a very interesting review of Moneyball, Vince Gennaro of The Hardball Times contended that the Athletics' ability to build a contender on a small budget was achieved not by exploiting an under-appreciated commodity (high OBP/OPS players), but was instead achieved due to the team's use of productive players who had yet to reach free agency. Gennaro pointed out that 12 of the top 14 players on the Athletics' 2001 squad were either in their pre-arbitration or arbitration years ,which significantly limited their salaries relative to their production.
To get a sense of how successful organizations in baseball's middle class assemble rosters without breaking their budgets, I've dissected the 2009 player payrolls for the Rays and Twins. Payroll information is courtesy of Cot's Baseball Contracts:
TAMPA BAY RAYS
Player salaries for 2009: $63.3 million
Players with annual salaries exceeding $10 million: None
Players with annual salaries of $5-10 million: Carl Crawford ($8.3 million), Carlos Pena ($8 million), Pat Burrell ($7 million) and Scott Kazmir ($6 million) were worth 66 win shares in 2008
[Commentary: The Rays are in one of the most enviable positions in baseball, with no fewer than five All-Star caliber players under team control for four to six years. They can surround these inexpensive stars with talented -- and cheap -- young players from their minor league system and pick up a veteran free agent or two to fill in the gaps. Alternatively, they can trade players who are nearing free agency (e.g. Akinori Iwamura) to either bring in prospects to maintain their farm system or to support a playoff run.]
MINNESOTA TWINS
Player salaries for 2009: $65.3 million
Players with annual salaries exceeding $10 million: Justin Morneau ($11.6 million), Joe Nathan ($11.3 million) and Joe Mauer ($10.5 million) were worth 73 win shares in 2008
Players with annual salaries of $5-10 million: Michael Cuddyer ($7.7 million) was worth eight win shares in 2008
[Commentary: The Twins have been developing quality major league ballplayers since the dawn of time. They sign some of their stars before they reach free agency and typically trade the rest. The team remains competitive year in and year out by focusing on their minor league system and avoiding trades that bring in veterans in exchange for prospects.]
Perhaps the most exciting thing about the Rangers' recent renaissance is the major league team's reliance on talented young players who are under club control for three to six years and the organization's emphasis on building and maintaining a strong minor league farm system. The chart below provides a rough idea of what major league players the Rangers might have under club control through the next 10 years:
Like the Rays, the Rangers have developed or acquired no fewer than five All-Star-caliber talents whom they control for at least four years. Also like the Rays, the Rangers have significant talent in their minor league system that they will be able to use to fill in gaps at the major league level without having to rely on free agency.
Assuming a reasonable number of the minor league players -- especially the pitchers -- develop into at least average major leaguers, it is possible that future Rangers' rosters will include 10-12 pre-arbitration players making approximately $500,000 per year and an additional 8-10 arbitration-eligible players earning an average of $2 million to $3 million. Filling twenty roster spots with talented players who will cumulatively earn $30 million leaves an enormous amount of flexibility to an organization that can use the remaining $50 million in its budget to either sign its stars to long-term deals or to bring in a free agent or trade acquisition to fill a key need.
15 Comments | in Analysis, The Season
Reader Comments (15)
Outstanding analysis. I would submit that this is also why one can't fall in love with the Marlon Byrds of the world, particularly if they become type A free agents. They provide a way to keep adding quality depth to your system through premium draft picks, not to mention you're overpaying to sign them up for their decline years at a rate established for their peak seasons.
In addition, you have to be willing to let a guy go earlier than you might like, who may still have use for your franchise, in the effort to get maximum value, keep the consistency in the system, and maintain player cost certainty. Examples above; Francisco, Wilson, maybe Hamilton.
I didn't see Tommy Big Game Hunter on there. How many more years do we have him under control?
The unexpected success of this 2009 squad has been thrilling, yet one wonders if it would have been better if the team hadn't played so well - if now they are going to miss the playoffs. They probably could have not only gotten rid of the Millwood albatross in July, but because he was still pitching well then, they might have even gotten a decent young player or prospect for him. Now they are stuck with him, and his 12 million salary next year is going to shackle them, I'm afraid.
But as David has outlined here, in terms of young controllable talent, the Rangers possess a wealth that many clubs surely envy, and they should be okay as long as they don't have unexpected, serious injuries and their players keep developing and moving up the ladder.
Great analysis, David. I have to ask, though... You don't have Marteen getting in a full ML season until 2013. Why is that?
This is good stuff and goes hand and glove with my all time favorite Rangers subject....next year.
Sorry for the out-of-date player information in the article. I wrote this in April and had not looked at it since. It's fun to see how much the career expectations for Hunter and Perez have improved in the past five months. Vallejo, Diamond, and Pina should now be off the list, of course, and Lemon's future as a shortstop seems very much in doubt. Except for moving Hunter from "Reliever" to "Starter," everything else looks to be pretty solid. It's been a good year.
I love the visual representation, easy to view and get the point. It is a VERY good thing, considering the current ownership situation, that the team does indeed have so much young talent under control. They will be relying almost exclusively on that talent in 2010 if they are hamstrung financially this offseason.
One other point, and a nearly obvious one at that, and one that you touched on in the free agency post: It makes sense to pursue this strategy considering that most players peak around age 27 -- when they are usually still under team control.
The Rangers' current strategy of locking up key players for team friendly deals through the first year or two or three of free agency is very smart, and cost effective to a point even when those players don't quite reach expectations. Of course, that strategy isn't entirely new, Tampa has been doing it, as has Minnesota, and Cleveland did it under John Hart in the 90s.
If you wrote it in April then where is Arias. :)
Your graphic also shows where the lack of depth is in the system.
Pina is gone.
Rob - I get a pat on the back for not having Arias and Duran on the list in April and a slap in the face for including Diamond and Vallejo. The funny thing is, I saw Vallejo three times soon after he was promoted to AAA and I was impressed with his ability to hit the ball and relatively unimpressed by his defense and base-running. It was as if Vallejo became the anti-Vallejo right before his season went into a tailspin.
Let it be known that David is not to blame for the outdated information in the graphic -- I published it early Wednesday morning without informing him beforehand and without allowing him the opportunity to update the information. That'sentirely on me.
[FWIW, I am now contemplating the construction of a similar, continuously updated arb/pre-arb calendar on the site. Tremendously enlightening stuff, and we're all better for having read it.]
Pursuant to this discussion, I vaguely recollect Keith Law once saying that he's not a fan of locking up players to long-term deals solely because they're the best young players in the organization, with the overriding point being that if you're going to tender a risky offer like that to a player with just 1-3 years of service time to his credit, you had better damn well be sure that he's going to be a star or a near-star relative to the entire league and not a star on your team.
I agree with that line of thought up to a certain point, and I suspect that with the market shifting towards the "lock 'em up while they're young" philosophy, we're going to see more instances of these sorts of long-term deals not paying the expected dividends for teams ... I also vaguely recollect Law not being a fan of the Kinsler extension (exactly why that was eludes my memory recall right now, but I think it was probably because he wasn't convinced of Kinsler's future star power), which is interesting now in that his offense has taken a pretty huge step backwards in 2009, primarily because his approach is trending in a most disturbing Blalock-esque direction.
That contract was (and still is) a steal, and it would take a Blalock-esque plunge off the deep end of the value pool to make that contract detrimental to the Rangers, but Law's initial appraisal may not be quite as off-base as we might have once believed. His defense keeps him at an All-Star level for now, but I think it's permissible to have some concerns about the direction he seems to be headed in with the bat.
While you have written an excellent analysis, you've left off two very important things. The first being that the Rangers play in the 5th largest market in the country. Minnesota and Tampa are nowhere near that high. You shouldn't treat your team like a small market team when it's nowhere close to being one. I realize that Mr. Hicks is financially strapped, but they've been talking about this youth movement and letting free agents go for a few years now. I'm not saying to scrap the plan because it's a great plan (though I believe some of the players we are relying on may not be what they're being billed as). But at some point you have to pony up the cash and go get a Chone Figgins to be your CF. I love Borbon but he's not the answer in CF bc he can't throw (think Carl Crawford). Josh has proven his body can't handle it either.
My second point is something we brought up on Diamond Talk Wednesday night. The Rangers will be trimming payroll. A LOT of payroll. They have owed roughly $76 million this year. With Padilla, Byrd, Jones, Benson and the like gone, they're losing around $34 million and will be down to around $43-47 million (i'm guestimating with arbitration and bringing in a veteran at around $750,00). Only two teams (Florida and and I don't recall the other) were below that this year. KC, Washington, Pittsburgh, Minnesota and several other small market teams were in the $60s to $80s. Think about that.
Some interesting decisions to be made with the arb guys. Do you sign them to extensions; no, no money, to you go to arb with them; maybe that way you are only committed to them for one year, or do you go the way of Fla, and trade you're arb guys, this might happen. Feldman's value will never be higher than this off season and Wilson or FF will still have some value, the big question is what is Hamilton's value?
Phil - Thanks for weighing in. I think that the plan and its associated payroll implications are independent of the financial troubles of Tom Hicks. The Rangers' decision to focus on player development and eschew free agents in 2007 ensured that the team's payroll would go down for a few years as the roster got younger. As those young players begin to reach arbitration and free agency, the payroll will rise. Assuming the team hangs on to its best young players, then the team payroll projects to go up by ~$10M per year beginning with a base of ~$50M in 2010. While the team could go out and sign a few free agents during the coming off-season, it would most assuredly affect the team's ability to re-sign some of its own players in a few years.
The two teams with a sub-$50M payrolls in 2009 are Florida and San Diego. The team whose path the Rangers seem to be following, the Rays, had a sub-$50M payroll in 2008 and followed that with a $65M payroll in 2009. As a fan, I appreciate watching a team that can compete while remaining fiscally responsible.